CERI Commodity Report Crude Oil

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1 CERI Commodity Report Crude Oil March 2014 Geopolitical Tensions and Supply Disruptions By Martin Slagorsky It is not surprising in today s highly interconnected world to hear that geographically remote events can potentially impact the rest of the world and energy flows. This article will provide a brief overview of two such major events that are affecting crude oil and natural gas markets today. Ukraine, Russia and European Energy Recent political tensions between two neighboring countries are spilling over into energy markets. Russia s use of natural gas as leverage against Ukraine continues and creates critical choices; Ukraine and many countries in Europe depend on Russia for natural gas, just as Russia relies on Europe to buy the vast majority of its natural gas exports. It is therefore a complicated tool that Russia chooses to wield against Ukraine. Gazprom, a Russian state-controlled gas exporter, has stated that if Ukraine wants natural gas to continue flowing into the country, it must pay its current debt of $US1.9 billion and begin paying for supplies (at a higher price) as they flow across the border by the beginning of April. 1 On April 17, 2014, Russian President Vladimir Putin postponed the deadline by a month as the US, European Union (EU) and Russia came to an agreement in Geneva aimed at reducing tensions in Ukraine. Besides the obvious hardship for Ukraine, Europe will also feel the effects of a potential halt in Russian gas exports to Ukraine; currently the EU-28 gets 24 percent of its gas from Russia, half of which passes through CERI Commodity Report Crude Oil Editor-in-Chief: Dinara Millington (dmillington@ceri.ca) About CERI The Canadian Energy Research Institute is an independent, not-for-profit research establishment created through a partnership of industry, academia, and government in Our mission is to provide relevant, independent, objective economic research in energy and related environmental issues. We strive to build bridges between scholarship and policy, combining the insights of scientific research, economic analysis, and practical experience. For more information about CERI, please visit our website at pipelines in Ukraine. 2 If Russia ends exports to Ukraine, some natural gas could be brought to Europe through other pipelines such as the Nord Stream, which runs from Russia into Germany without passing through Ukraine, and is currently running under capacity. However, Europe would need to supplement this with other sources of energy, such as consuming strategic reserves, importing more expensive liquefied natural gas (LNG), developing its shale gas resources and perhaps resorting to coal generation for some electricity (though spare capacity is limited). Recently, the global demand for natural gas and LNG has increased after the decision by Germany and Japan to close their nuclear power plants and China s efforts to burn less coal. This, combined with the inelastic supply of LNG, implies that Europe will likely find it cheaper to help Ukraine pay its debt to Gazprom than to find alternative energy sources. 3 There are several aid packages being prepared to support Ukraine and prevent it defaulting. The EU, Japan and the US are in different stages in the process of approving aid packages worth $US1.6 billion, $US1.5 billion and $US1 billion, respectively. Additionally, the International Monetary Fund has approved an $US18 billion aid package over two years. Halting gas exports to Europe would have a negative impact on Russia as well. Russia is the world s largest exporter of natural gas, with 90 percent of its produced gas being shipped to Europe, generating over $US60 billion in sales in If freezing gas exports to Europe is a plan, it needs to secure an alternative market for its natural gas, or face a large decline in revenue. To this date, Russia has been unable to capture a significant market share in the Asian market, leaving it heavily reliant on Europe. For years Gazprom has been trying to sign a multi-billion natural gas supply deal with the China National Petroleum Corporation (CNPC). The uncertainty in its ability to supply natural gas to Europe increases the pressure for Gazprom to compromise on the longstanding issue CNPC s unwillingness to pay European prices for natural gas. In 2013, a deal between Gazprom

2 Page 2 and CNPC was reached in principle; however continued disagreements on pricing have prevented the signing of a contract. 4 Meanwhile, Russia s actions in the Crimea region have resulted in weary investors and economic sanctions by western countries. On April 28, 2014 the US announced further sanctions against companies, asset freezes and travel bans on individuals close to Putin. The EU is also expected to increase their sanctions on Russia. 5 Standard & Poor s (S&P) cut Russia s sovereign debt rating on April 25, 2014, from BBB to -BBB, citing outflows of both foreign and domestic investment capital resulting from the current tensions between Russia and Ukraine. 6 S&P warned against further withdrawals of foreign investment, depending on additional sanctions. Russia experienced $US50.6 billion in capital outflows in the first quarter of 2014, roughly 80 percent of the total for Libyan Oil Geopolitically speaking, a continuous matter of concern is the Middle East North Africa (MENA) region. Recently, the world crude market was affected by a diminishing supply of oil coming from one of the OPEC members, Libya. Libyan oil production first decreased dramatically during the 2011 revolution that overthrew the regime of Muammer Gaddafi. Since then, production rebounded for a short period of time before declining again. Current production is estimated at around 110,000 barrels per day (BPD), far from the pre-revolution production of 1.65 million barrels per day in As shown in Figure 1, production of oil has continued to fluctuate, based on political uncertainty, violence, and forced closures of oil terminals. Figure 1: Libya s Crude Oil Production Post-revolution disruption of oil production in Libya is the result of rebel militia groups seeking greater regional autonomy. A militia group, who has controlled four oil terminals for eight months, has reached an agreement with the Libyan government. The government will compensate the rebels and drop charges in exchange for the release the oil terminals. Two terminals have already been released, increasing Libya s export capacity by as much as 200,000 BPD. 9 A spokesperson for the state run National Oil Corp. announced on April 28, 2014 that exports from the eastern port of Zueitina, a 70,000 BPD terminal, is already set to receive tankers. The closure of oil terminals is estimated to have cost Libya an estimated $US18 billion in revenue. This lost revenue is felt acutely by Libya, which in 2012 generated 70 percent of its GDP and 90 percent of government revenue from sales of oil and natural gas. 10 The impact of Libyan oil production has been felt internationally as well through fluctuations in oil prices. The price of Brent was near a six-week high of approximately $US110 per barrel mid-april 2014, before the announcement of the deal between the Libyan government and rebels, which led to a price decrease of almost one percent. 11 The fact that rebel groups in Libya inadvertently changed world oil prices can be seen as a signal of a potential threat to the markets that marginal groups can carry. Endnotes 1 Putin s Asia Play, Petroleum Economist. March 17, European energy security: Conscious uncoupling, The Economist. April 25, Ibid. 4 Putin s Asia Play, Petroleum Economist. March 17, U.S. sanctions Putin allies as Ukraine violence goes on, Reuters. April 25, Russia's credit rating downgraded by S&P, BBC. April 25, Russia Debt Rating Cut to Step Above Junk at S&P, Bloomberg. April 25, Libya country overview, U.S. Energy Information Administration. April 25, Libyan rebels agree to reopen two oil terminals after deal, BBC. April 25, Libya beyond the Revolution: Challenges and Opportunities, International Monetary Fund. April 25, Oil prices fall after agreement to lift Libya blockade, Financial Times. April 25, CERI Commodity Report - Crude Oil

3 Page 3 US$/bbl Spot Crude Prices Differential WTI Brent US$/bbl US$/bbl WTI - Edmonton Light Price Differentials Differential WTI Edmonton Light Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Spot Prices WTI Brent Edm.Light H.Hardisty Year-to-Date Quarter-to-Date April 14, SOURCE: EIA. SOURCE: EIA. US$/bbl WTI - Hardisty Heavy Price Differentials US$/bbl NYMEX WTI Crude Forward Curve 12 months Differential WTI Hardisty Heavy Feb Mar Apr Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 SOURCE: NRCan, EIA. SOURCE: EIA, CERI.

4 SOURCE: EIA, CERI. SOURCE: NRCan. Page 4 NYMEX Petroleum Products CDN/US$ Exchange Rate US$/gal 3.50 CDN/US$ RBOB Gasoline Heating Oil Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 NYMEX Prices Unleaded Gasoline Heating Oil Year-to-Date Quarter-to-Date April 14, Oil Demand Global in Selected Oil Demand Countries US Products Demand March March 2014 Y-on-Y change MMbpd % % 15% % 49% 48% 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 10% 5% 0% -5% -10% -15% -20% -25% -30% Total Gasoline Jet Fuel Distillate Residual Propane Other Total OECD Total Non-OECD non-oecd Demand share SOURCE: IEA Oil Market Report. SOURCE: EIA Weekly Petroleum Status Report. CERI Commodity Report - Crude Oil

5 SOURCE: IEA Oil Market Report, CERI. SOURCE: IEA Oil Market Report. SOURCE: IEA Oil Market Report. SOURCE: IEA Oil Market Report. Page 5 Global Oil Supply MMbpd Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 non-opec Supply OPEC Supply non-opec Share of Global Supply Canadian Oil Production by product Mbpd 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Q13 1Q14 2Q14 3Q14 4Q14 AB L/M/H AB Bitumen SK Other NGLs Synthetic 61.5% 61.0% 60.5% 60.0% 59.5% 59.0% 58.5% 58.0% 57.5% 57.0% Mbpd 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Mbpd 3,000 2,500 2,000 1,500 1, US Oil Production by region 4Q13 1Q14 2Q14 3Q14 4Q14 Alaska California Texas Federal GOM Other Lower 48 NGLs Other OECD Commercial Stocks by region Feb-11 Feb-12 Feb-13 Feb-14 OECD North America OECD Europe OECD Pacific

6 Page 6 MMb US Commercial Stocks February 28 - March 28, 2014 Crude Gasoline Distillate Products Total MMb Canadian Stocks on Land 4Q12 1Q13 2Q13 3Q13 4Q13 SOURCE: EIA Weekly Petroleum Status Report. SOURCE: IEA Oil Market Report. CERI Commodity Report - Crude Oil

7 Page 7 World Supply and Demand Balance (MMbpd) Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 World Demand OECD non-oecd World Supply Non-OPEC OPEC NGLs OPEC Crude Supply - Demand OECD Stocks (MMbbls) Days Cover OPEC Crude Oil Production (MMbpd) Sustainable Production Over (+)/Under (-) Target Capacity Jan-14 Feb-14 Mar-14 Jan-14 Feb-14 Mar-14 Saudi Arabia Iran UAE Kuwait Qatar Nigeria Libya Algeria Ecuador OPEC Iraq Total OPEC WTI Price Projections ($US/barrel) Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 High Price Case Reference Case Low Price Case

8 Page 8 Data Appendix CERI Commodity Report - Crude Oil

9 Page 9 A1: Historic Light Sweet Crude Futures Prices ($US per barrel) NYMEX Light Sweet Crude Last 3 Day Avg. When 12-Month Spread Close Average Near Mo. Strip Avg. (1-2 Mo.) Q Q Q Q Q Yr-on-Yr Chg. 5.6% 4.9% 4.9% -31.1% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Yr-on-Yr Chg. 7.0% 7.4% 9.6% 6.5% A2: Historic Crude Product Futures Prices ( US per gallon) NYMEX Unleaded Gasoline NYMEX Heating Oil Last 3 Day Avg. When 12-Month Spread Last 3 Day Avg. When 12-Month Spread Close Average Near Mo. Strip Avg. (1-2 Mo.) Close Average Near Mo. Strip Avg. (1-2 Mo.) Q Q Q Q Q Yr-on-Yr Chg. -6.3% -5.8% -5.1% -3.8% 3.3% 2.7% -0.7% -2.7% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Yr-on-Yr Chg. -6.2% -5.8% -6.0% -5.2% 0.6% 1.5% 0.9% -2.4% Notes (Tables A1 and A2): Prices are listed by contract month. Close: final contract close on the last day of trading. Last 3 Day Average Close: simple average contract close on last three days of trading. Average When Near Month: simple average closing price on trading days when contract was near month. 12-Month Strip Average: simple average of daily near 12-month contract closing prices in a given contract month. Spread: difference between one-month and two-month forward prices in a given period. Source: New York Mercantile Exchange (NYMEX).

10 Page 10 A3: World Crude Oil Contract Prices (FOB, $US per barrel) Saudi U.A.E. Oman U.K. Norway Russia Venez. Kuwait Ecuador Mexico Nigeria Indon. Arab Lgt Dubai Oman Brent Ekofisk Urals 1 T.J. Light Blend Oriente Isthmus Bonny Lgt Minas Q Q Q Q Q Yr-on-Yr Chg. -4.6% -3.5% -3.7% -3.8% -4.1% -3.8% -5.6% -4.4% -6.5% -10.3% -4.1% -3.1% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Yr-on-Yr Chg. -2.6% -1.2% -1.7% -0.8% -1.5% -0.3% -5.4% -2.0% -5.8% -10.0% -1.0% 3.8% Notes: 1. Urals is Delivered price at Mediterranean. Contract prices are based on prices at the end of each month. Source: OPEC Monthly Oil Market Report. A4: North American Posted Crude Prices (FOB, $US per barrel) United States Canada ANS 1 Lost Hills Kern R. WTI WTS GCS Okla. Sw. Kans. Sw. Mich. So. Wyo. Sw. ELS 2 HH Q Q Q Q Q Yr-on-Yr Chg. -3.9% -6.3% -3.8% 4.9% 5.1% 6.1% 4.9% -2.4% 5.3% 4.2% 0.3% 14.8% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Yr-on-Yr Chg. -6.5% -6.0% -3.5% 4.8% 5.1% 6.1% 4.8% 4.9% 5.2% 3.8% 17.0% 17.4% Notes: 1. ANS is Delivered price on US West Coast. 2. Edmonton Light Sweet. 3. Hardisty Heavy. Posted prices are based on price at the end of each month. Sources: Oil & Gas Journal; Natural Resources Canada. CERI Commodity Report - Crude Oil

11 Page 11 A5: Crude Oil Quality Differentials (FOB, $US per barrel) Light vs. Heavy Sweet vs. Sour Arab Lt Arab Hv Diff. Isthmus Maya Diff. ELS 1 HH 2 Diff. GCS WTS Diff Q Q Q Q Q Yr-on-Yr Chg. -4.6% -4.3% -10.3% -15.4% -8.2% 4.9% 6.1% 5.1% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Yr-on-Yr Chg. -2.6% -1.7% -10.0% -16.6% 7.8% 8.2% 6.1% 5.1% Notes: 1. Edmonton Light Sweet. 2. Hardisty Heavy. Based on contract prices at the end of each month. Sources: OPEC Monthly Oil Market Report: Oil & Gas Journal; Natural Resources Canada. A6: Crude Oil Spot Prices and Differentials (FOB, $US per barrel) Spot Prices Differentials WTI Brent Dubai Urals Basket 1 WTI-Brent WTI-Dubai WTI-Urals WTI-Basket Q Q Q Q Q Yr-on-Yr Chg. 10.7% -0.8% -0.6% -0.4% -0.8% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. 5.7% -6.4% -5.5% -6.0% -6.5% Notes: 1. OPEC-Reference Basket is average price of seven crude streams: Algeria Saharan Blend, Dubai Fateh, Indonesia Minas, Mexico Isthmus, Nigeria Bonny Light, Saudi Arabia Light and Venezuela Tia Juana Light. Source: OPEC Monthly Oil Market Report.

12 Page 12 A7: World Petroleum Product Spot Prices ($US per barrel) US Gulf Coast, Pipeline Rotterdam, Barges Singapore, Cargoes Gasoline 1 No. 6 3% 2 Jet/Ker. Gasoline 1 Gasoil Resid. 3 Gasoline 1 Gasoil Resid Q Q Q Q Q Yr-on-Yr Chg. -4.3% -3.2% 0.5% -4.6% -2.5% -2.0% -4.2% -1.9% -1.5% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. -8.5% -8.6% -7.6% -11.2% -7.5% -8.7% -9.9% -6.9% -6.5% Notes: 1. Regular unleaded gasoline. 2. Waterborne 3. High Sulfur ( %) Residual Fuel Oil. Spot prices are based on average daily prices over a specific timeframe. Source: IEA Oil Market Report. A8: Product Spot Prices in Selected American Cities ( US per gallon) NY Harbor US Gulf Los Angeles Gasoline 1 No. 2 H.O. Distill. Gasoline 1 Jet Fuel Distill. Gasoline 1 Distill Q Q Q Q Q Yr-on-Yr Chg. -5.0% -2.7% -5.4% -4.0% -3.8% -4.0% -5.2% -4.1% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. -8.5% -3.4% -0.3% -7.8% -7.9% -7.1% -13.9% -7.3% Notes: 1. Reformulated regular unleaded gasoline. Spot prices are based on average daily prices over a specific timeframe. Source: EIA Weekly Petroleum Status Report. CERI Commodity Report - Crude Oil

13 Page 13 B1: World Petroleum Supply and Demand Balance (million barrels per day) OECD Non-OECD OPEC World N. A. Europe Asia-Pac Total 1 Asia Non-Asia FSU Total 1 P. Gulf Non-Gulf Total 2 Total 3 Demand Q Q Q Q Q Q Q Q Q Supply Q Q Q Q Q Q Q Q Q Balance Q Q Q Q Q Q Q Q Q Notes: 1. Totals for OECD and non-oecd supply include net refining gains; specific regions/groupings within each do not. 2. OPEC demand is an estimate based on historical annual data. 3. Balance for World equals global stockbuilds (+) and stockdraws (-) for crude oil and petroleum products and miscellaneous gains and losses. Regional surpluses (+) and deficits (-) are balanced through net-imports and stock changes in the short-term, and net-imports in the longer term. Supply includes crude oil, condensates, NGLs, oil from non-conventional sources and processing gains. Demand is for petroleum products. Source: IEA Oil Market Report.

14 Page 14 B2: World Petroleum Production (million barrels per day) OECD Non-OECD OPEC World N. A. Europe Asia-Pac Total Asia Non-Asia FSU Total P. Gulf Non-Gulf Total Total Q Q Q Q Q Yr-on-Yr Chg. 8.4% 3.1% 6.7% 7.6% -0.4% 1.7% 0.4% 0.6% 4.5% -13.0% -0.8% 1.6% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Yr-on-Yr Chg. 8.9% -4.6% 2.1% 6.5% -0.3% 3.8% -0.8% 0.5% 3.0% -14.6% -2.4% 0.7% R/P Ratio Notes: 1. Production includes crude oil, condensates and NGLs. 2. Reserve-Production ratio is based on latest month production and British Petroleum reserve estimates. Sources: IEA Oil Market Report and BP Statistical Review of World Energy. B3: OECD Commercial Petroleum Stocks (million barrels) North America Europe Asia-Pacific OECD Crude Product Total Crude Product Total Crude Product Total Crude Product 1 Total , ,408 2, , ,413 2, , ,344 2,571 4Q , ,413 2,665 1Q , ,374 2,657 2Q , ,376 2,662 3Q , ,401 2,697 4Q , ,344 2,571 Yr-on-Yr Chg. -0.2% -4.8% -3.5% -0.6% -6.4% -3.5% -8.6% -0.2% -3.8% -1.7% -4.9% -3.5% Feb , ,382 2,643 Mar , ,374 2,657 Apr , ,013 1,370 2,677 May , ,016 1,350 2,656 Jun , ,376 2,662 Jul , ,393 2,673 Aug , ,411 2,678 Sep , ,401 2,697 Oct , ,012 1,356 2,668 Nov , ,335 2,621 Dec , ,344 2,571 Jan , ,347 2,573 Feb , ,329 2,567 Yr-on-Yr Chg. -1.5% -4.3% -2.9% -2.8% -3.3% -2.6% -2.5% -3.4% -3.3% -2.1% -3.8% -2.9% Notes: 1. Product includes only finished petroleum products. 2. Total stocks include NGLs, refinery feedstocks, additives/oxygenates and other hydrocarbons. All stocks are closing levels for respective reporting period. Source: IEA Oil Market Report. CERI Commodity Report - Crude Oil

15 Page 15 B4: OPEC Crude Oil Production and Targets (million barrels per day) Persian Gulf Non-Persian Gulf OPEC-11 OPEC-11 Arabia Iran UAE Kuwait Qatar Venez. Nigeria Libya Algeria Angola Ecuador Total 1 Target Iraq Q Q Q Q Q Yr-on-Yr Chg. 4.9% 4.1% 2.6% -1.4% -4.1% 1.2% -2.5% -73.9% -7.0% -7.4% 4.0% -2.5% 9.2% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Yr-on-Yr Chg. 2.9% 2.6% 1.9% -2.8% -5.4% 0.4% -3.0% -83.8% -10.5% -8.5% 4.0% -4.2% 7.9% Quotas Over/Under % -16.2% 23.9% 24.3% -4.1% 23.6% 16.2% -85.0% -15.0% 6.6% 20.9% -12.1% Notes: 1. Does not include NGLs; OPEC production targets apply to crude oil only. 2. Iraq does not have an official OPEC target. 3. OPEC-10 production targets. 4. As of latest month. Source: IEA Oil Market Report. B5: OECD Refinery Activity Crude Input (MMbpd) - Utilization (percent) - Refining Margins ($US/barrel) North America Europe Asia-Pacific OECD Input Util. Margin 1 Input Util. Margin 2 Input Util. Margin 3 Input Util Q Q Q Q Q Yr-on-Yr Chg. 1.8% % -9.4% -73.7% -0.8% 116.2% -2.4% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. 4.1% 573.3% -2.8% -64% -6.3% % -0.2% Notes: 1. Based on dated Brent being processed in average US Gulf cracking refinery. 2. Based on dated Brent in average Rotterdam cracking refinery. 3. Based on spot Dubai in average Singapore hydroskimming refinery. Source: IEA Oil Market Report.

16 Page 16 C1: US Petroleum Supply and Demand Balance (million barrels per day) United States 1 East Mid-West Supply Demand Net-Imp. Stk. Chg. Supply Demand Balance Supply Demand Balance Q Q Q Q Q Yr-on-Yr Chg. 11.2% 4.2% -18.1% 41.2% 8.3% 17.1% 5.2% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Yr-on-Yr Chg. 11.6% 1.5% -26.8% 39.8% 9.9% 15.2% -2.5% % of Total % 100.0% 1.8% 30.6% 24.0% 25.0% South-Central North-West West Supply Demand Balance Supply Demand Balance Supply Demand Balance Q Q Q Q Q Yr-on-Yr Chg. 10.9% -0.1% 7.4% 5.9% 0.2% 3.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Yr-on-Yr Chg. 11.4% -3.4% 11.5% 0.0% 2.4% 2.0% % of Total % 26.7% 7.2% 3.7% 11.2% 14.0% Notes: 1. Does not balance because of unaccounted for crude oil. Regional surpluses (+) and deficits (-) are balanced through net-imports/transfers and stock changes in the short-term, and net-imports/transfers in the longer term. 2. As of most recent month. Supply includes crude oil, condensates, NGLs, oil from nonconventional sources and processing gains. Demand is for petroleum products. Source: EIA Petroleum Supply Monthly. CERI Commodity Report - Crude Oil

17 Page 17 C2: US Petroleum Demand by Product (million barrels per day) Finished Petroleum Products NGLs Petroleum Gasoline Jet Fuel Distil. Resid. Total 1 Total Total Q Q Q Q Q Yr-on-Yr Chg. 2.4% 4.6% 5.7% 11.8% 3.0% 9.2% 4.2% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Yr-on-Yr Chg. -0.1% 5.7% 5.4% -23.1% 0.2% 6.6% 1.5% Notes: 1. Total includes other finished petroleum products. 2. Total petroleum demand includes refinery feedstocks, additives/oxygenates and other hydrocarbons. Source: EIA Petroleum Supply Monthly. C3: US Petroleum Stocks (million barrels) Petroleum Stocks 1 Crude Oil Finished Products East Mid-West S-Cent N-West West U.S. Total 2 Gasoline Jet Fuel Distil. Resid. Total , ,751 1, , ,807 1, , ,760 1, Q , ,807 1, Q , ,793 1, Q , ,818 1, Q , ,832 1, Q , ,760 1, Yr-on-Yr Chg. -0.6% -6.4% -1.4% 2.1% -7.7% -2.6% -0.6% -30.1% -5.7% -5.5% 11.0% -7.1% Jan , ,812 1, Feb , ,791 1, Mar , ,793 1, Apr , ,807 1, May , ,817 1, Jun , ,818 1, Jul , ,818 1, Aug , ,821 1, Sep , ,832 1, Oct , ,812 1, Nov , ,792 1, Dec , ,760 1, Jan , ,743 1, Yr-on-Yr Chg. -8.3% -6.1% -2.8% 2.5% -5.0% -3.9% -1.3% -30.9% -5.5% -12.8% 3.9% -11.1% Notes: 1. Petroleum stocks include crude oil, finished products, NGLs, refinery feedstocks, additives/oxygenates and other hydrocarbons. 2. Includes Strategic Petroleum Reserves. 3. Total includes other finished petroleum products. All stocks are closing levels for respective reporting period. Source: EIA Petroleum Supply Monthly.

18 Page 18 C4: US Petroleum Net Imports by Source (million barrels per day) Region of Origin OPEC Canada Mexico Lat. Am. Europe Africa M.E. Total 1 Venez. S. Arabia Nigeria Total 2 P. Gulf Q Q Q Q Q Yr-on-Yr Chg. 3.5% -5.7% -32.3% 176.8% -72.7% 4.3% -18.1% -20.2% 22.9% -85.4% -15.7% 4.3% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Yr-on-Yr Chg % -8.4% -31.4% % -79.8% 22.1% -26.8% -14.5% 48.9% -84.8% -12.5% 22.8% % of Total % 10.2% 9.7% -2.8% 2.4% 41.1% 100.0% 12.1% 27.8% 1.3% 58.9% 41.1% Notes: 1. Total includes net-imports from Russia and Asia-Pacific region. 2. Total OPEC includes the other eight cartel members. 3. As of latest month. Source EIA Petroleum Supply Monthly. C5: US Regional Crude Oil Production (million barrels per day) PAD District U.S. Major Producers East Mid-West S-Cent N-West West Total Alaska Calif. 1 Louis. Texas G. of Mex Q Q Q Q Q Yr-on-Yr Chg. 37.2% 24.8% 21.0% 22.0% 1.4% 18.6% 0.4% 2.2% 5.5% 32.6% 6.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Yr-on-Yr Chg. 33.7% 25.7% 11.8% 18.7% -0.9% 12.7% -3.2% 1.3% -2.1% 30.8% -14.4% R/P Ratio Notes: 1. California includes Federal Offshore crude oil production. 2. Gulf of Mexico includes Federal Offshore production adjacent to Texas and Louisiana. 3. Crude oil Reserve-Production ratio as of latest production month. Crude oil production does not include NGLs. Source: EIA Petroleum Supply Monthly. CERI Commodity Report - Crude Oil